The FTSE 100 will take its cue from the important BoE meeting this week

Another change in direction from the FTSE 100 last week, another correction to the upside. Over the past few days the FTSE has taken off from the 6,500 points that was the low at the start of the week and managed to rally to the 6,700 points’ area around the middle of the week and then spent its time trading just shy of this barrier.

This week however the outlook is mixed and strongly correlated to the events to come since the calendar is full of important economic reports and developments. Other than the very important US jobs report scheduled for this Friday we also have the Bank of England meeting on monetary policy and this time it will come with a twist.

Usually the BoE policymakers meet and after deciding whether to change the monetary policy or not they just release their decision – which has been the same over the past months – and we need to wait for 2 weeks to find out more information. The release of the BoE meeting’s minutes is what allows us to pick their minds but this time we will have the chance to hear from Governor Carney immediately after the meeting itself.

As such the FTSE will respond to any fresh news and I expect volatility to be elevated even though we’re now in August and investors are on their way to their summer vacations. From a technical point of view I believe that the breakout from the recent sideways formation that the FTSE has been trading in will show us the way. We need to be prepared to take advantage of this breakout as it will decide the price action for the remaining days of the week.

To the upside, my trigger lies just above the recent highs of 7,010 points and a successful break will open the path fort the 6,750 and 6,800 points’ levels. To the downside, the critical support lies around the 6,650 points’ area and a break lower should drive the FTSE towards the 6,600 and 6,550 points very quickly. So this week my suggestion to you is to wait for the breakout, trade it technically and take your profits off the table as quickly as possible as the US jobs report on Friday might again turn the tables for the London index.

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